Abstract
This introduction to biophysical economics is well written, accessible, beautifully illustrated, well-organized, with excellent references. It is a welcome contribution to the literature of economics’ engagement with the environment. It does far more than simply apply microeconomics to natural resources and environmental issues with such typical economic tools as carbon taxes, cap and trade, and time discounting of environmental investments. The book’s most important contribution is to document the integral relation between economics and energy. Drawing on the work of Howard T. Odum and Nicolas Georgescu-Roegen, the basic unit of analysis across all life forms is energy.
In part I, the book provides a review of contemporary economics, with a brief history of economic thought, including Marx (41–44), and the Social Structure of Accumulation and the Monthly Review Schools. There is a critique of neoclassical economics and a motivation for biophysical economics. Rather than abstract neoclassical economics, biophysical economics includes concrete biological and physical properties. Biophysical economics “acknowledges that the basis for nearly all wealth is nature and views most human economic activity as a means to increase (directly or indirectly) the exploitation of nature to generate more wealth” (section 4.1: 83).
There is a broad review of human history, with a focus on the concept of “energy surplus” (section 6.1: 124). That is, in any given civilization, there will be a total energy produced above the amount needed for minimal reproduction of the population. The chapter “The Evolution of Humans and their Economics” reviews the human evolutionary origins and migrations and the development of tools. Human evolution can be viewed in relation to energy evolution, including agricultural techniques and fossil fuel technology. There is a review of the history of empires, including ancient Sumer, but not an explicit focus on distinct institutional forms or modes of production.
Energy is consumed to produce more wealth, and so the sources of energy have been significant in the long-term history of human evolution and in the course of specific civilizations. There is a measure of the efficiency of this relationship, called “energy return on investment” (EROI): how much energy is gained from a given investment of energy in production. This EROI is the central measure of the textbook, applied to the rise and fall of civilizations, as well as to the division of labor within a given civilization, and the impact of new fuel sources and new technologies. This ratio must be greater than one for the energy production to be “efficient,” and to generate a surplus (388–403). This concept of energy efficiency is applied to evolution of plants and animals as well (316–20). For example, there is an “iron law of evolutionary energetics” (316), where plants and animals must capture more energy than they use in order to survive. Further, a “human as a machine works at about 20 percent efficiency, that is, the power output of a human... is about 20 percent of the food energy input to that machine” (317).
The concept of EROI can be measured empirically. The measurement of energy can be applied to photosynthesis in plants, as well as respiration in animals. For example, the use of carbohydrates to produce energy in living animals is explained with the following chemical equation:
and is reversible for photosynthesis in plants (304). There is a chapter, “The Required Quantitative Skills,” which reviews quantitative techniques for such analysis. While EROI is a biophysical measure, it is also related to costs of production, using typical fossil fuels, to demonstrate the relevance to economics. The concept of EROI can be applied to investments in skilled labor relative to the productivity gain (130–31), as well as to the energy costs of the extraction of fossil fuels compared with their energy content (388–400).
Parts II and III review the history of energy, with a particular focus on petroleum, and parts IV through VI focus on economics and energy, including the long-term development of the fossil fuel industry. Drawing on the work of Odum and Georgescu-Roegen, among others, the book provides basic concepts for understanding energy, such as measures of energy, the laws of thermodynamics, entropy, solar energy, photosynthesis, and combustion. There is a brief review of biogeochemical cycles, such as the hydrological cycle (342–47), and a brief discussion of climate change and planetary boundaries (348–50, 476–85). Overall the text is more focused on the combustion of hydrocarbons as the predominant source of energy and the potential depletion and reduction of energy efficiency of the economy. The expectation is that the EROI for the economy as a whole will be declining in the foreseeable future (413–21), which the co-authors judge to be a potential source of economic stagnation (93–96, 113–16).
There is a view of nature as separate from humans (325–26), while also recommending that economics be understood as being within nature (432–35). There is a critique of ecological economics for becoming too directed toward placing market prices on natural capital, which derive from the economy, rather than studying the integral connection between economics and energy. To be “truly sustainable,” the book recommends the following steps: stabilize and reduce population and economic activity, improve energy efficiency and move toward renewable power, restore the dignity of meaningful work, create a more just income distribution, and adjust our expectations regarding consumption (498–500).
The book provides no specific analysis of capitalism, or the particular relevance that fossil fuel energy has as a result of the need for increasing labor productivity, surplus value, and profit. Planetary limits are discussed (477–80), but without much attention to alternative renewable energy technologies. There is no discussion of the carbon cycle, an odd omission given the emphasis on fossil fuels throughout the text. More attention to the political economy of natural resources would be welcome, such as the works of Daniel Yergin, Michael Klare, and Timothy Mitchell. More attention to ethics would also be welcome, along with the pitfalls of measuring human well-being with market prices and the time discounting of long-term investments in ecological restoration (Stern 2009, 2015). That is, there is little discussion of distribution nor methods of measuring the well-being of future generations.
Although the co-authors mention the term “paradigm” (429–30), they do not consider alternative views of the position of humans in nature, other than an anthropocentric one. For them, the goal of the “wealth of nations” appears to be a human universal, even while they advocate limits to growth. They leave the expression of a possible contradiction to a single quote from Foster (2017: 500):
To achieve these things we will need to break with “business as usual,” that is with the current logic of capital, and introduce an entirely different logic, aimed at the creation of a fundamentally different social metabolic system of reproduction.
An alternative approach that integrates the critique of capitalism with the concept of energy is recent work by Moore (2015). Drawing on Marx, one could use a type of “biophysical” indicator, abstract human labor time, in order to provide a critique of the exploitation of labor in the capitalist system. By contrast, Hall and Klitgaard seem to view the focus on “biophysical” indicators as sufficient as a substitute for critical analysis of institutions. Perhaps they would go so far as to suggest that every civilization and every species must maximize energy surplus in order to survive, competing to reach the top of the food chain (310–14). To accomplish their goal of comprehensive biophysical accounting, nonetheless, the inclusion of the chemical energy in life forms and the solar powered global flows of air, water, and ocean, in addition to the combustion of fossil fuels, would be welcome. An example of a literature that includes metabolism and chemical energy more generally is work by Falkowski (2015), which explores the co-evolution of the earth’s atmosphere and life forms, and which is not written from an anthropocentric point of view.
In summary, this text offers a sweeping integration of economics and energy, including long-term human history, technology, and history of economic thought. The book does not explicitly question the goal of economic activity to produce more wealth, but traces this goal historically, in relation to the sources and uses of energy and energy efficiency. Calls for critique and alternatives are relatively marginal in comparison with the major focus of energy extraction and production, and its biophysical and financial metrics.
